2017-04-30

Unprecedented Deleveraging in China

A very long article in iFeng discussing tighter financial regulation, it's impact on the A-share market, a new economic growth cycle and the possibility that leverage and financial controls will finally make value investing a profitable strategy, as opposed to short-term trading amid rapidly inflating asset bubbles.

The unprecedented financial deleveraging is expected to change China's financial system a lot of money in the financial institutions between the idle ills. And now, the signs of recovery show the new economic cycle approaching, and the "nineteenth" the arrival of this political node, all this is the birth of a new cycle of China's capital market arrival. This will be a different period from the past, pointing to the new position.

...Financial regulatory authorities introduced the relevant policy is normal, but his party will be at the same time "heavy attack" is relatively rare, unprecedented supervision can be seen. Regulators of this series of boxing fist force, penetrating regulatory financial regulatory system ready to come out.

During the "two sessions" this year, representatives and members of the "three sessions" and some financial officials have already started to talk about the urgency of penetrating supervision. This also reflects that regulators have reached a consensus on strengthening financial supervision.

...But it is clear that the short-term pattern of A-share market will still be directly affected by financial leverage. However, it is more noteworthy that there are many indications that, along with the progress of the financial deleveraging process, coupled with signs of economic recovery, "nineteen" this new political cycle and other factors close to the impact of superposition, China A new cycle of capital markets is looming.

Founder Securities chief economist Ren Zeping's view is that from a macroeconomic point of view, now has stood on the starting point of the new cycle. He believes that a large number of macro micro-evidence shows that China's economy into the growth rate of "economic L-type" of a horizontal, is standing on the "new cycle" on the starting point. Since 2016, China's industrial enterprises capacity utilization is gradually bottomed out, some of the traditional industry capacity to clear the actual situation than the statistical data show more fully.

...Although there is a lot of debate about the new economic cycle, there is a consensus that at least the opening of the Chinese economy from a new economic cycle is at least getting closer and closer, creating a time window for the current financial leverage. And the more important consensus is that, as we all know, "nineteen" as scheduled, for Chinese society, a new political cycle is coming.

..."China's stock market, the pattern may be really changed." Beijing, a broker who read the latest market. In the past, chasing and selling, short-term trading, speculation and other speculative behavior in the last year quickly failed, over the past 20 years, these have been more effective on the market to make money strategy; by contrast, has always been only " Mouth talk about it "only the value of investment this year to time-tested, in the past tepid Guizhou Maotai, Gree Electric began to soar.